EAST-WEST Irresponsible populisms

Everyone has spoken their mind over the Greek crisis, from Nobel Prize winners to television presenters, without forgetting the most irresponsible of politicians. Here's what we have to say.

The most popular thesis is described in a reasonably reliable (compared to a few ridiculous viral video interviews) and scientific form in the highly clicked on article by Greek journalist Yiannis Mouzakis, who stresses how only €27 billion of the overall €237bn of the two bailout programs have actually been delivered to the Greek government, while 89% of the funds provided have been used to prop up the banks.

I'll try to explain why this interpretation of events is total nonsense. Some may state it in good faith, most are in very bad faith. all seem to have the ear of public opinion. With reference to the data produced by the bank of International Settlements (BIS), a highly respected international institution that is not a bank and therefore above suspicion, one can easily make out that — contrary to popular hearsay — only a minority of the funds issued to Greece went to foreign banks.

The beneficiaries of the Greek bailouts are mainly the government, the Greek banks and their account holders, and rightly so. Let's look at the figures once again: at the end of 2009, the Greek debt placed with foreign investors amounted to €68 billion.

The first two aid packages (the 2010 and 2012 bailouts) provided a total of €149 billion (and not the €237bn figure mentioned by Mouzakis, who refers to an amount that was not completely paid out), of which 43% was allocated to cover foreign bank credits. The German and French banks received a 25% share of this pot — around €37bn, according to BIS figures. This amounts to 1.3% and 1.9% of the total foreign credit held respectively by German and French banks, putting paid to those who claim the only purpose of the bailout was to straighten the accounts of the credit institutions in these countries. And the remaining 57% (over €84bn)? Most of it ended up in the coffers of the Greek government, which it used to pay public employee wages and pensions, and little more than 20% went to help out Greek banks!

In 2012, at the time of the second bailout, the Greek government managed to impose a haircut (meaning a “debt remission”, as the “Our Father” requests) on its debt worth 52% of its nominal value. That meant an initial loss for the creditor banks of as much as €30bn, which spiralled further in subsequent months — not exactly peanuts. It should also be noted that between November 2014 and May 2015, the Greeks withdrew €32bn from its banks. Money which, without the various aid packages, the banks would never have managed to dole out.

Yet, from the Greek prime minister downwards, a series of interpretations from both left and right have falsely backed the reasons of the Greek people, fingering Europe or standing in favour of national management solutions to the crises and the economy. Even on completely separate issues such as the migratory exodus towards the continent's southern shores, the nationalist populist movements have been fuelling the basest and most benighted instincts among the public opinion of the 28 member states, already worried by the total failure of both national and European leaders in coming up with effective and convincing solutions as they all try to win the countless national and local elections (one every six months in our 28 member Europe), despite the calls for European federal integration.

At the latest round of European elections, the populist parties came out on top in Denmark, France and the United Kingdom; second in Italy; and third in Austria, Finland and Greece (where they subsequently came to power in January). Their recipes are not identical but are always damaging and potentially destructive of the bonds of civil coexistence.

The most worrying cost of the Greek crisis (that only a few care to mention) and its irresponsible handling by its ruling class is that increasingly broad sectors of the electorate are taking every opportunity to express their dissent against the parties that are trying to implement austerity programs. And to add to this, the populist critique of the European technocracy is being spiced with the nationalist approach that shuns monetary integration and promotes a return to the national sovereignties of the past. A path that risks bringing about the kind of divisions and conflicts that could be even more disastrous than the one in Ukraine where once again two European countries are at each other's throats. It is essential — and I'm sure you'd agree, Angela — that we proceed without hesitation towards a mutual sharing of responsibility at least within the eurozone, which means a single economy minister and joint economic and fiscal policies.

This is the only way of guaranteeing the resources required to fuel growth and prosperity and to banish the ghosts of irresponsible populisms, a source and multiplier of further conflicts.

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